ISTANBUL- Up to 25,000 tonnes of Turkish flour exports, largely destined for Iraq, are stuck at Turkey's southeastern border gate of Habur, the head of a regional association told Reuters on Monday, after Ankara restricted flour exports last week.
Turkey announced last week that it was halting the export of flour other than that produced from imported wheat.
Veysi Duyan, head of Turkey's southeastern-based Tigris Flour Makers Association, said the move was carried out to avoid supply shortages and price fluctuations in the domestic market.
"At the moment, nearly 1,000 vehicles carrying 20,000 tonnes to 25,000 tonnes of flour are waiting to cross into Iraq," Duyan said. "Our industry was not ready for this. It was carried out overnight and abruptly."
Turkey's Trade Ministry announced the move in a note on Sept. 5, citing the authority to restrict or ban exports under circumstances that included "extraordinary developments in the market and insufficiency in the goods to be exported".
Turkish flour is crucial for the Iraqi market, which bought half of Turkey's total wheat-flour exports of 3.48 million tonnes last year, according to data from the Turkish flour industrialists' association.
In its statement, the ministry said the restriction aimed to ensure price stability in domestic flour prices, protect consumers and prevent speculation, adding that it would be lifted once that was achieved. It did not provide a time frame.
Grain traders said the development was a result of the sharp devaluation of the Turkish lira.
"The loss in value of the Turkish lira meant Turkish wheat became very cheap in comparison to imported wheat," one European trader said. "Simultaneously, the devaluation means Turkish flour is very competitive in export markets in the Middle East and Asia, so millers want to make as many sales as possible."
Flour millers started to blend more cheap Turkish wheat, reducing use of imported Russian/Ukrainian wheat and exporting the flour, he said.
"The strong demand caused a sharp rise in Turkish domestic wheat prices," the trader said. "So the government decided that any flour exporter must import the wheat first and then export the flour."
Turkey has faced price increases in many sectors after the lira lost 40 percent of its value this year alone and annual inflation jumped to 18 percent in August, its highest since December 2003.
Increases to the price of bread, a key commodity for Turkish households, have made regular headlines.
(Reporting by Humeyra Pamuk, additional reporting by Michael Hogan in Hamburg. Editing by Dominic Evans, David Goodman and Kirsten Donovan) ((humeyra.pamuk@thomsonreuters.com; +90 212 3507062; Reuters Messaging: humeyra.pamuk.reuters.com@reuters.net))
